2-Quarters-in-1

Categories Author: Scott Bartone, Investing, U.S.

“Frankly, [4Q16] was almost a story of two quarters in one,” explained TD Ameritrade CEO Tim Hockey a couple days before the inauguration.1 “November 8th was the election; we saw retail investors essentially go on the sidelines up until that date, trading levels were down, and then it just exploded right after that. And, it’s actually carried over into January as well — trading levels are high.”

Indeed, the 2016 Presidential Election saw a surge in equity market returns (and market activity in general, which is where Hockey’s observations come into play2). On the flip side, there was also a reversal for many investment factors and sectors. Continue reading “2-Quarters-in-1”

2016 Factor Alpha Newsletter

Categories Investing, OSAM Research

We focus on factors because of the reason behind why they work, not the performance. In any given year, one factor can do well or poorly, creating “noise” in the long-term process. This is why we blend factors together to build proprietary multi-factor themes.1 Singling out a factor for good/bad performance is not what we do — instead, we look for conceptual ideas that exhibit long-term efficacy.

Using the All Stocks Universe2 as a guide, this inaugural edition of the Factor Alpha Newsletter (FAN) offers a live-time snapshot of the past 12 months. Continue reading “2016 Factor Alpha Newsletter”

Alpha or Assets?

Categories Author: Patrick O'Shaughnessy, Investing, Market Cap, Value

“Financial markets lend themselves to initially self-reinforcing but eventually self-defeating processes.”

— George Soros

More and more investors are buying “factor”-based strategies, which invest using measures like valuation and low volatility. However, the most popular strategies are applying factors the wrong way. We believe that strategies should be built for alpha, not scale — but the asset management industry has gone in the opposite direction.  Continue reading “Alpha or Assets?”

Small Cap Equities — Inefficient & Opportune
(Part 2 of 2)

Categories Author: Chris Meredith, Author: Ehren Stanhope, Investing, U.S., Value

(Part 1 linked here)

Avoid Value Traps via a Quality Overlay

Not every cheap stock outperforms. Even within the cheapest decile of value, there is wide dispersion in underlying stock returns. Certain stocks are cheap for a reason: value traps. Continue reading “Small Cap Equities — Inefficient & Opportune
(Part 2 of 2)”

Small Cap Equities — Inefficient & Opportune
(Part 1 of 2)

Categories Author: Chris Meredith, Author: Ehren Stanhope, Investing, U.S., Value

Small cap equities1 are generally misunderstood and underappreciated. We believe they present a phenomenal total return opportunity for discerning long-term investors. The construction of common small cap indices and the nuances of the small cap universe favor an active approach. Continue reading “Small Cap Equities — Inefficient & Opportune
(Part 1 of 2)”

Fundamental Relationships have Changed in QE’s Wake

Categories Author: Ehren Stanhope, Investing, U.S., Value, Yield

“When the facts change, I change my mind. What do you do, sir?”

— Attributed to John Maynard Keynes (1883-1946)

I read a lot of market commentary. There are a lot of doomsayers out there. While I can’t argue with the fact that valuations are higher than they were at the market lows in 2009, the calls for a calamitous decline based on valuation seem overblown. Valuation tends not to be a good predictor of bear markets. Continue reading “Fundamental Relationships have Changed in QE’s Wake”

Factor Alpha & International Investing: Part 4 (of 4)

Categories International, Investing, Momentum, OSAM Research, Value

(This is the fourth in a series of four posts that examine the efficacy of factor-based investing in the International market.)

Active Management Landscape  Continue reading “Factor Alpha & International Investing: Part 4 (of 4)”